If 98% of a specific business sector in South Africa collectively contributes some 39% to the country’s gross domestic product (GDP), providing access to capital for that group would be a no-brainer. Wouldn’t it?
However, as Andrew Maren, CEO of FinTech ProfitShare Partners notes, this sector – the backbone of South Africa’s economy – comprises small and medium-sized enterprises (SMEs), which puts it on the back foot when it comes to securing finance.
“Smaller companies rarely have the type of assets required by traditional banking organisations to secure a loan or other type of finance. By nature, banks are largely risk averse when it comes to start-ups, entrepreneurs and newer businesses,” says Maren.
With a background in banking, Maren knows the difficulty of the SME seeking access to finance, as well as why a large institution would have to raise its interest rates for a new or unknown business.
“This puts finance even further away from the SMEs grasp,” he says. “The entrepreneurs or SMEs tend to be a younger demographic; usually conducting informal business initially; and rarely have the public reputation required to constitute being a bankable business.”
Understanding both sides of the elusive coin, Maren set about creating an organisation that would bridge the gap between what traditional financial institutions offer and what Government is driving for the sector. “ProfitShare Partners was created to enable SMEs to partner on big deals by providing a business finance solution to take opportunities that would bring in the money to grow their businesses,” he says.
Partnering for mutually beneficial results
Maren’s vision was to enable business growth among SMEs by offering innovative and disruptive business finance solutions. “When SMEs have access to financial assistance, doors are opened that reduce inequality, enabling expansion and job creation,” he asserts.
“By creating a FinTech, ProfitShare Partners has been able to be agile, choose partnerships that look sustainable, and assist SMEs that have a contract or Purchase Order to fulfill, with 100% of the capital needed.”
Offering finance from R250 000 to R5 000 000 per transaction, PSP does not require financials, security or even a track record – often the sticking point with financial institutions, Maren notes, adding that approval can be determined within 24 – 48 hours of application and successful SMEs get their much-needed cash within days.
“Because applications are made online with the SMEs Purchase Order and supplier’s quote, the process is speedy. On approval, PSP pays the supplier and our client delivers the goods to the customer, who pays the invoice. Our agreed share of profits is distributed and the SME has cashflow to continue their operations.”
Obviously, ProfitShare Partners is in it for the money, says Maren… “But it’s so much more than that from our point of view. We feel part of the growth and sustainability of hundreds of small businesses in South Africa that are thriving now. We know that every SME is a story of a dream and a family to feed.
“As long as PSP is able to thrive, we aim to be the driving-force FinTech backing a sector that is vibrant, full of possibilities – and raising the GDP of our country. There’s little more satisfying than being part of a company making money and a difference.”
